Mailbag: Booze Q's

As legislation to get government out of the booze business is debated in the state House, CF's mailbox is overflowing with questions about liquor liberty! You asked, we answered:

Q: Doesn't this bill make it cost-prohibitive for mom-and-pop shops?

A: The amended bill is extremely generous to beer distributors. Beer distributors get the first opportunity for the 1,200 wine & spirits licenses, and no one else can purchase these licenses for 1 year. Beer distributors get a much lower price for those licenses than anyone else. And they get 48 months (4 years) of state financing to pay for the license fees. This pricing for the ability to be the sole purveyor of beer, wine, and spirits is almost the power to print money.

Q:If the wholesalers are going to be granted exclusive privileges to distribute specific brands, that is a form a monopoly and wouldn't that tend to raise prices?

A: The unfortunate reality is that there is no true free-market in the booze business; the wholesale side is always a form of one oligopoly or another.

In many states, under the three-tier system, producers (wineries, brewers, distilleries) work with a single wholesaler to distribute their product to retail locations. There is going to be a wholesaler markup for the cost of doing business regardless, but due to economies of scale and the fact that producers can negotiate a deal among wholesalers, wholesalers won't have monopoly power or incentive to increase prices.

Q: Having lived in states where grocery stores, pharmacies, and membership stores could sell beer, wine and/or liquor; availability and prices were great. My fear is that the new bill's limitations and restrictions will keep us from really getting "free enterprise" benefits.

A: There is likely no perfect bill, but the fact that this bill gets Pennsylvania out of the wholesale business and will eventually shut down the government-run retail businesses is a great step that we hope the House votes in favor of this week!

Q: Wait a minute, did I read the amendment correctly? Did it say that grocery stores can only sell wine, i.e. no beer? If that's the case, then that means I still have to go to one store to buy my wine and another to get my beer? Sounds pretty much like what we have now.

A: Beer distributors would be able to carry beer, wine & liquor as a one-stop shop. Grocery stores and convenience stores with a restaurant license would be able to sell beer and wine. The prohibition on selling alcohol at places that sell gasoline is removed, meaning those with a store and restaurant license could carry beer and wine as well. There is also package reform for both beer distributors and restaurants, hotels, and grocery stores with a restaurant license to offer more options in what they can sell.